AT&T activated 1.3M more iPhones than rival Verizon in Q2 2011

Bolstered by remaining exclusivity with the $49 entry-level iPhone 3GS, AT&T activated 1.3 million more iPhones than Verizon in the second quarter of calendar 2011.

Verizon reported its latest quarterly earnings on Friday, in which the nation's largest wireless carrier disclosed that it activated 2.3 million iPhone 4 units during the three-month span. Those sales helped smartphone penetration grow to 36 percent, up from 32 percent in the last quarter and 21 percent a year ago.

But Verizon was bested by rival AT&T, which posted its own second-quarter earnings earlier this week. AT&T characterized the iPhone as "strong," and revealed that a total of 3.6 million activations occurred during the quarter.

Of the iPhones activated on AT&T last quarter, 24 percent were subscribers new to the carrier. AT&T also said that iPhone subscriber churn was down slightly sequentially.

AT&T's 1.3 million activation lead over Verizon was no doubt bolstered by the fact that only AT&T has access to the GSM-only iPhone 3GS, which sells for just $49 with a two-year contract.

Verizon's activations represent only the iPhone 4, which sells for $199 and $299 on contract. AT&T did not provide a breakdown of how many iPhone 3GS units it activated in the last quarter, so it is unknown how the two carriers compared in terms of iPhone 4 activations.

Apple and AT&T had an exclusive agreement for the iPhone in the U.S. since the company's first handset launched in 2007. But that changed this year, when Apple and Verizon inked a deal to sell the iPhone. A CDMA variant of the iPhone 4 went on sale to Verizon customers in February.

Earlier this year, one Wall Street analyst revealed that Apple's older iOS-based products, including the iPhone 3GS, remain top sellers years after their debut. Citing checks with U.S. retail channels, Canaccord Genuity technology analyst Michael Walkley found "strong demand" for the iPhone 3GS at AT&T.

"These older generation products with reduced prices often outsold new Android products," Walkley said in May.

The iPhone 3GS, first released in 2009, was not updated to become compatible with Verizon's CDMA network. The current hardware can only run on AT&T's network in the U.S.

The continuing popularity of the iPhone 3GS has led to rumors that Apple will continue to make the handset available for sale, even after the anticipated introduction of a fifth-generation iPhone later this year. Mike Abramsky with RBC Capital Markets said in June that Apple is expected to offer the iPhone 3GS for free with a two-year contract when a so-called "iPhone 5" launches later this year.

In addition, Abramsky said he could see Apple offering a lower-priced iPhone 3GS offered for $399 unsubsidized. This would help to increase Apple's smartphone share globally, particularly in emerging markets where prepaid service models are the norm.

[LIST][*]iPhone users are a bit smarter than your average smartphone user.

Really? Obviously an opinion of yours with no supporting data. The "I'm superior, smarter and richer because I buy Apple" statements that are sometimes made by Apple fanatics is a turn off for a lot of people, even Apple users.

Back to the article itself, I've been curious what percentage of those iPhone sales at ATT are for the older 3GS at $49. As much as 50%? Only 10%? Has anyone seen any breakdown anywhere with actual numbers or is it just something they don't reveal?

Before all the fist pumping for AT&T gets out of hand, let me say I'm grateful Apple went multi carrier and gave people the choice of the best carrier in their area. iCloud is going to be pretty useless if you don't have a signal. And no carrier is everywhere.

All that hype and hating on AT&T, and at the end of the day, people stay.

A quarter of people that bought iPhones on AT&T were new users that probably bought cheap 3GSs.

As far as iPhone 4 sales I'd say that both networks are probably equal. We'll see what happens when both networks have equal amounts of low cost iPhone options, possibly in the form of a discounted iPhone 4 or in the form of a new iPhone Lite type device.

Back to the article itself, I've been curious what percentage of those iPhone sales at ATT are for the older 3GS at $49. As much as 50%? Only 10%? Has anyone seen any breakdown anywhere with actual numbers or is it just something they don't reveal?

I would assume that the number could be greater than 50%. The 3GS is still the number 2 selling smartphone in the nation, and it's only available on 1 network, meaning that the 3GS is probably a high percent of AT&T's iPhone sales.

I suspect (but purely speculating) that there are several reasons for the increased subscriptions at ATT v VZW:

1. 3GS. Surprising number of 3GS buyers out there. These are AT&T only of course.
2. LTE. Some buyers going into a VZW store will elect to pick up a 4G phone.
3. October contract change. Good number of potential VZW subscribers got locked into new ATT contracts when ATT eased new phone upgrade rules to get ahead of VZW iPhone.
4. iPhone 5/4S. Lots of people on the fence either way, waiting for new phones in the fall and to see if there are any material differences in rate plans, hardware.
5. Intl. Fair number of people need GSM compatibility for travel and so AT&T.
6. Advertising. I thought there was more "we're better" advertising from AT&T than there was from VZW regarding the iPhone. VZW advertised iPhone availability heavily but with less emphasis vs. ATT's offering. Data+Voice simultaneously stood out as an easily illustrated difference.

Assuming we get a new chip that can handle CDMA and GSM on the next phone, we'll see 1, 3, 4, and 5 fade away over time. Once LTE is in place at both carriers, 2 and 6 should drop away. And then we'll get a clearer picture of AT&T v VZW.

I suspect (but purely speculating) that there are several reasons for the increased subscriptions at ATT v VZW:

All good reasons, to which I think we should add 'stickiness'. Lots of people renewing on Verizon already use Android and are happy with it. Many of AT&Ts iPhone sales will be repeats. As the iPhone offerings on Verizon improve and the other reasons you list fade we'll get a better idea of just how sticky Android is as a platform.

You just helped sell a ton of iPhones to Tea Party members! Now we just need an app showing the Ancient Egyptians being chased by dinosaurs and one demonstrating all fossils were placed in rock at the same time.

From Apple ][ - to new Mac Pro I've owned them all.Long on AAPL so biased"Google doesn't sell you anything, Google just sells you!"

You just helped sell a ton of iPhones to Tea Party members! Now we just need an app showing the Ancient Egyptians being chased by dinosaurs and one demonstrating all fossils were placed in rock at the same time.

Muslims won't want a Mohammed phone, but i guess we can use GPS so the phone always shows the Qiblah. God-phones could be a whole new thing!

Really? Obviously an opinion of yours with no supporting data. The "I'm superior, smarter and richer because I buy Apple" statements that are sometimes made by Apple fanatics is a turn off for a lot of people, even Apple users.

You're both kind of ridiculous: 1) Apple fans are no smarter than anyone, that's a pompous and elitist thing to say and think. I guess all the business folks who use BB and android are somehow idiots? No one is better, just personal preference. 2) I personally hate when people on here always say things like, "Do you have any supporting data?" as if a person needs some chart to prove their opinion. As much as I/you/we have right to disagree with them, they don't need a scientific report to prove their opinion. You're both extremist.
(Sorry for bring off topic)

Clearly the 3GS is helping At&t. It's all a win-win-win for all parties. AT&T is continuing good sales, Verizon is gaining new customers and profits thanks to the iPhone, and Apple being the biggest winner increasing their userbase, selling more and making mo' money. No one cares, but I'm on my old 3GS on AT&T and will switch to Vz. AT&T is horrible in the SF/Bay Area. On the train now - blue skys, sunny and I have 'No Service' on my phone, have to wait till I get into SF to submit this, ridiculous!!! I'll take Vz slow over AT&T sporadic and not reliable. == All IMHO

AT&T's global footprint is far larger (which also makes the future reselling of your iPhone that much easier)

There are some advantages to AT&T, if you have a signal in your area. But there are possible reasons for these numbers that you left out.

The $50 iPhone 3GS is 1/4 of the cost of an iPhone 4, and is only available on AT&T.

A strong brand association between AT&T and the iPhone, and Verizon and Android, has been built up over the last few years.

Verizon has a much stronger lineup of Android phones to sell than AT&T does, including LTE phones.

Most important, people who really wanted an iPhone were already part-way into their contract on AT&T when the iPhone on Verizon came out. I suspect the simultaneous release of the iPhone 5 on both carriers will change things. We'll see, but I do think it is a little too early for you to crow too loudly.

I would assume that the number could be greater than 50%. The 3GS is still the number 2 selling smartphone in the nation, and it's only available on 1 network, meaning that the 3GS is probably a high percent of AT&T's iPhone sales.

I would say of course it is, most people are looking for the cheapest price, they don't care what OS it's running. Android fans like to tout Android's market share being larger because more prefer Android over iOS, just as Windows users do. The fact of the matter is, MOST people don't care, they just want a smartphone or computer and they don't want to pay a lot for it.

When you charge a premium for something and it sells, that's desirability and only a few companies can pull it off.

Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.

I would say of course it is, most people are looking for the cheapest price, they don't care what OS it's running. Android fans like to tout Android's market share being larger because more prefer Android over iOS, just as Windows users do. The fact of the matter is, MOST people don't care, they just want a smartphone or computer and they don't want to pay a lot for it.

When you charge a premium for something and it sells, that's desirability and only a few companies can pull it off.

And I would say you're absolutely right. I know people that change phones of opposing OSs simply because the price was right.

"Few things are harder to put up with than the annoyance of a good example" Mark Twain"Just because something is deemed the law doesn't make it just" - SolipsismX

You just helped sell a ton of iPhones to Tea Party members! Now we just need an app showing the Ancient Egyptians being chased by dinosaurs and one demonstrating all fossils were placed in rock at the same time.

Keep your evolutionistic theories to yourself please.

"Few things are harder to put up with than the annoyance of a good example" Mark Twain"Just because something is deemed the law doesn't make it just" - SolipsismX

8 carriers in the UK (Orange, T-Mobile, O2, Tesco, Asda, Vodaphone, 3Three, LibreMobile) and 6 have the iPhone available for contracts. Yet only 2 carriers in the USA carry the iPhone? You'd think for a country that size it would be at least, what, ten? Does the USA even have ten carriers? I can only name four (Sprint, T-Mobile, AT&T, Verizon)